Watching the phone hacking crisis crack wide open over the last few weeks has left me puzzled about its ultimate causes: what is it about News Corp that has produced these events?

I don't think we understand very much about this. We can say things like, "Ultimate responsibility goes to the man at the top," meaning Rupert Murdoch, chairman and CEO. And that sounds right, but it still doesn't explain how any of it happened. "The key people are criminals, liars, or willfully blind..." We could say that, but then we would have to explain how so many of them ended up at one company.

Puzzles like these have led many people to the conclusion that there's a culture inside News Corp that is in some way responsible, and I basically agree with that. Mark Lewis, lawyer for the family of Milly Dowler, said after Rebekah Brooks resigned: "This is not just about one individual but about the culture of an organization." Carl Bernstein agrees. He wrote this in Newsweek a few days ago:

As anyone in the business will tell you, the standards and culture of a journalistic institution are set from the top down, by its owner, publisher, and top editors. Reporters and editors do not routinely break the law, bribe policemen, wiretap, and generally conduct themselves like thugs unless it is a matter of recognized and understood policy.

Private detectives and phone hackers do not become the primary sources of a newspaper's information without the tacit knowledge and approval of the people at the top, all the more so in the case of newspapers owned by Rupert Murdoch, according to those who know him best.

Bernstein tells us that one of his sources is a former executive at News Corp, who says: "Murdoch invented and established this culture in the newsroom, where you do whatever it takes to get the story, take no prisoners, destroy the competition, and the end will justify the means."

I think this is correct as far as it goes, but now I want to introduce my theory of how this culture works and why it exists in the first place.

Because to me that is the most striking thing about the way News Corp has reacted to these events from the beginning. Denial! Not only in the sense of deflecting questions with "move along, nothing to see here..." (when, in fact, there is something) but that deeper sense of denial we invoke when we say that a woman is in denial about her unfaithful husband or a man about his coming mortality.

Denial is somehow built into the culture of News Corp, more so than any normal company. It isn't normal for the CEO to say, as Murdoch said on July 15, that his company had handled the crisis "extremely well in every way possible," making just "minor mistakes," when the next day the executive in charge (Rebekah Brooks) resigns, then a day later gets arrested, followed by Murdoch's closest aide, Les Hinton, who also resigned in hopes of reversing the tide of defeats.

Your top people don't quit for minor mistakes, but no one in News Corp seemed troubled by that July 15 statement. The Wall Street Journal reported it without raising an eyebrow. Murdoch was confronted with his "minor mistakes" quote in Tuesday's parliamentary hearing but he turned down the chance to take it back. Where does denial so massive come from?

Here's my little theory: News Corp is not a news company at all, but a global media empire that employs its newspapers – and in the US, Fox News – as a lobbying arm. The logic of holding these "press" properties is to wield influence on behalf of the rest of the (much bigger and more profitable) media business and also to satisfy Murdoch's own power urges.

However, this fact, fairly obvious to outside observers, is actually concealed from the company by its own culture. So here we find the source for the river of denial that runs through News Corp.

Fox News and the newspapers Murdoch owns are described by News Corp, and understood by most who work there as "normal" news organisations. But they aren't, really. What makes them different is not that they have a more conservative take on the world – that's the fiction in which opponents and supporters join – but rather: news is not their first business. Wielding influence is.

Scaring politicians into going along with News Corp's plans. Building up an atmosphere of fear and paranoia, which then admits Rupert into the back door of 10 Downing Street.

But none of these facts can be admitted into company psychology, because the flag that its news-related properties fly, the legend on the licence, doesn't say "lobbying arm of the Murdoch empire." No. It says "First Amendment" or "Journalism" or "Public Service" or "news and information."

In this sense the company is built on a lie, but a necessary lie to preserve certain fictions that matter to Murdoch and his heirs. And that, I believe, explains how it got itself into this phone hacking mess. All the other lies follow from that big one.

Strangely, I do not think that News Corp people like Rebekah Brooks and James Murdoch are being insincere when they pledge allegiance to the values of good journalism. On the contrary, they believe that this is what their newspapers are all about. And this is the sense in which denial is constitutive of the company, a built-in feature that cannot be acknowledged by any of the major players because self-annihilation would be the result.